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Once a network reaches “critical mass”, Mr Grewal says, the incentives to join it can become irresistible. Certainly some standards are intrinsically better than others. “But as the network power of a standard grows,” Mr Grewal writes, “the intrinsic reasons why it should be adopted become less important relative to the extrinsic benefits of co-ordination that the standard can provide.” People defect from alternative networks. Eventually those alternatives disappear altogether. The choice of networks becomes a Hobson’s choice. You remain free to choose your network, but the distinction between choosing to join a network and being forced to join one is less evident.
FT.com’s Caldwell reviewing/summarizing “Network Power” by David Singh Grewal about globalization’s network effects, which sounds remarkably relevant to just about everything going on today. (naked capitalism has a good analysis of varied responses to Grewal’s globalization book in their post, ‘Globalization and Network Power’)
